johan rockström och anders wijkman - bankrupting nature 2013

Bankrupting Nature

Global risks and pathways to

global sustainability

Anders Wijkman and Johan Rockström

Gothenburg 20th February 2013 1

Motivet för ”Den stora förnekelsen” och ”Bankrupting Nature”

• Växande gap mellan den traditionella

ekonomin och Naturen

• Växande gap mellan Finansmarknaden och

den reella ekonomin

• Dagens system – med konventionell tillväxt

och konsumtion som ökar - är inte hållbart

• Men det finns andra – och mer hållbara - sätt

att organisera ekonomin

Vi lånar av framtiden • Skulderna i relation till BNP inom OECD gått från 160 %

1980 till över 320 % idag. Som ett KORTHUS – inte hållbart

• Nya finansbubblor att vänta – och samhället får ta stöten

• Vi lånar av naturen. Miljö- och resursutrymmet krymper:

- Klimatförändringen

- 2/3 av viktigaste ekosystemen överutnyttjas

- Planetens Gränsvillkor

- ”Peak oil”, ”Peak fosfor”, ”Peak rare earths”

• Därtill kommer den sociala utmaningen: inkomstskillnader

+ arbetslöshet

• Digitaliseringen av samhället påverkar alla sektorer – och

många jobb försvinner medan färre nyskapas

• Kan dagens kapitalism klara övergången till en hållbar

ekonomi? En alternativ modell behövs – men hur ser den ut?

5 Photos: Mattias Klum

3-6-9

2013-02-22 Johan Rockström and Carl

Folke, Stockholm Resilience Centre

Humanity has reached a planetary saturation point

The Human ability to do has vastly

outstripped our ability to understand

A resilient biosphere the basis for

humen development

Fierce urgency of now

A great transformation to global sustainability necessary, possible,

and desirable

Kummu, Ward, de Moel, Varis 2010 Environmental Research Letters

Atmospheric CO2 concentration

Etheridge et al. Geophys Res 101: 4115-4128

IGBP synthesis: Global Change and the Earth System, Steffen et al 2004

Northern hemisphere average surface

temperature


Mann et al Geophys Res Lett 26(6): 759-762

Atmospheric N2O concentration


Machida et al Geophys Res Lett 22:2921-2925

Atmospheric CH4 concentration


Blunier et al J Geophy Res 20: 2219-2222

Ozone depletion


JD Shanklin British Antarctic Survey

Natural climactic disasters


Ocean ecosystems


FAOSTAT 2002 Statistical database

Coastal zone nitrogen flux


Mackenzie et al 2002.

Tropical rainforest and

woodland loss


Richards, the Earth as transformed by human action, Cambridge University Press

Domesticated land


Klein Goldewijk and Batties

Species extinctions


Wilson, the Diversity of Life.

Photo Mattias Klum

23

Photo: Mattias Klum

Photo Mattias Klum

Multiple Interacting driving forces pushing systems towards tipping points

Natural Fire regimes Biomass burning Palm-oil expansion El Nino El Nino goes from regenerative to destructive force Breaking millennia long Fire-El Nino relationship for Dipterocarp trees

The Resilience of the Earth System

Humanity’s 10,000 years of grace

Planetary

Boundaries

Climate

change

Ocean

acidification

Ozone

depletion

Global

freshwater

use

Rate of

biodiversity loss

Biogeochemical

loading:

Global N & P cycles

Atmospheric

aerosol loading

Land system

change

Chemical

pollution

…

Rockström et al. 2009 Nature, 461 (24): 472-475

Global fresh-

water use

Transgressing safe

boundaries

Global Warming did not stop in 1998 - as many deniers claim

30 Source: Skeptical Science, Church et al 2011

Climate

http://www.ijis.iarc.uaf.edu/seaice/extent/Sea_Ice_Extent_L.png

Photo: CC Jason Auch / Azote

Photo: S Zeff / Azote

34

Uncertain uncertainty

3 ºC 6 ºC

Klimatförändringens risker

Global emission pathways in compliance with a 2 ºC guardrail

(WBGU 2009)

Top Fossil Fuel Emitters (Absolute)

Top four emitters in 2011 covered 62% of global emissions

T%), United States (16%), EU27 (11%), India (7%)TTTTT

The growing gap between EU27 and USA is due to emission decreases in Germany (45% of the 1990-2011 cumulative difference), UK (19%), Romania (13%), Czech Republic (8%), and Poland (5%)

Source: CDIAC Data; Le Quéré et al. 2012; Global Carbon Project 2012

http://cdiac.ornl.gov/trends/emis/meth_reg.html

http://www.earth-syst-sci-data-discuss.net/5/1107/2012

http://www.globalcarbonproject.org/carbonbudget/

Adapted from Canadell et al., 2007

0 1 2 3 4 5 6 7 8 9

10

Resilience of the Earth system

Gt

Carb

on/y

r

land

ocean

atmosphere

Interactions among Planetary Boundaries

Merchants of Doubt • Tobacco, Acid rain, CFC and now Climate

change – the same tactics

• Financed by oil and coal lobby, but – as well – by right-wing think tanks, who view every attempt of gvt regulation of the economy as a threat to Freedom

• Ideology blocks new

knowledge – ex Kahan´s

study

Climate negotiations are not likely to deliver – at least not in time

Almost 20 years of negotiations and still no

agreement

Negotiations must continue, but a Plan B must be developed

We have to look for Ad hoc-solutions

Inte bara klimat – även ekosystem som urholkas och resursknapphet

• Vi har dålig förståelse av vad exponentiell tillväxt innebär - Ett land som Kina – med 7-10 % tillväxt per år – innebär en fördubbling av ekonomin på mindre än tio år

• Konsekvensen av den snabba tillväxten, inte bara i Kina, är att energi, mark och vatten kommer att vara knappa resurser i framtiden

• Klimatförändringen förstärker problemen – inte minst försörjningen med mat

• Men ekonomin och politiken hanterar inte detta

”Peak oil” major threat to prosperity

• Cheap oil is the main reason behind rapid increase in standard-

of-living

• Projected increase in demand will require a new Saudi every

third year, posing risk of gap between demand and supply

• Serious consequences for world economy – Energy transition

takes time

• Hype around shale oil and shale gas – great uncertainties

re possible reserves to extract and environment and

climate risks; leakage from shale gas appear large

• Military and security think tanks have issued repeated

warnings about peak oil and its consequences

EROI will become increasingly important:

• EROI for crude oil until 1970 – 50:1 to 100:1

• Today < 20:1

• EROI for tar sand in Canada – c:a 5:1

• EROI for wind – > 10:1

• EROI for ”ethanol from corn” – 1:1

• EROI for nuclear – ?

• EROI for solar energy – > 15:1

Critical issue: energy cost relative to GDP

Peak oil and rising energy prices will have serious consequences

• Cheap oil main reason for prosperity

• Growing gap between demand and supply

• Higher prices will affect growth

• Certain sectors will be severely hit, like transport and agriculture

• Tensions – and potential conflicts – around energy access are likely

• The world would need an Oil Protocol

Investments in Renewables and Efficiency on the rise – but too slow

• Many barriers to investments:

- information lacking

- split incentives

- finance; less support for renewables in 2012 than 2011

- time to commerzialise new technology and scale up.

- hype around shale oil and shale gas

- intermittency

- land and water requirements

- EROI

Real commodity prices, 1980-2011*

0

50

100

150

200

250

300

1980 1985 1990 1995 2000 2005 2010

Energy Metals & Minerals Agriculture

Note: 2011 is Jan-Feb average

In a resource-constrained world

• Competition for water, land, energy and

materials will be fierce

• Investments in resource-efficient infrastructure

and renewables must have top priority

• Recycling and reuse will be KEY

• R&D must be aiming at sustainable innovation

The Growth Dilemma • Continued economic growth, as presently

structured, will not be possible from the point of climate, ecosystems, resource constraints and planetary boundaries

• De-growth is not possible from the point of view of the economy, the financial system and social stability

• Few politicians want to discuss this dilemma

• The challenge can only be addressed through a thorough discussion in society and a transition to a more sustainable model

Major shortcomings in conventional economic policy framework

• Natural capital is not accounted for

• GDP growth confused with increase in welfare

• Resources are treated as if easy to substitute

• Non-linear systems don´t fit in linear economic models

• Positive discounting downplays costs in the future

• Externalities not accounted for + Perverse Subsidies

• Financial system by and large ignores of climate risks

• Income gaps widen dramatically

• Unemployment not proactively addressed

• The Financial system increasingly resembles a gigantic Ponzi Scheme; many people getting rich by depleting natural stocks and destabilizing climate or by creating bubbles – and selling out before the bubbles burst

The financial sector expansion

• In 1980 global financial assets represented 109 %

of world GDP

• In 2006 the ratio was 346 %

• “Bubbles” should surprise no-one

• House market in the US is still almost 40 %

below 2007 level

• In 1980 salary for CEO in finance was equal with

industry average; today > 4 times higher

• In 2007 finance sector made up 40 % of US

private sector profits! In 1970´s around 6%

• Too high debt ratios in too many countries

Financial sector and sustainability • Short term dominates; Quarterly reporting,

compensation systems extremely short term

• Rapid credit expansion – controlled by the financial sector, not gvts, means future is mortgaged

• Unsustainable investments proliferate and the consequences are negative as regards climate change, ecosystem overuse and resource depletion

• Money pouring into tar sands in Canada and shale oil in the US; whereas money for renewables is tough to obtain

• What about our Pension Funds?

Financial sector ignoring the risks • The valuation of fossil companies is related to the reserves reported

• The largest companies report much larger fossil reserves than can be used

to stay within 2° degrees - 745 billion tons CO2 vs 565 billion tons

• These companies < ¼ of estimated fossil reserves, most of which are

owned by state-owned companies

• The valuation shows a huge discrepancy between science and the way

markets work

• Markets appear to believe that a)climate change is a hoax, b) there will be

no international climate agreement or c) CCS will solve the problem

• If CCS is the solution, WHY are investments at a record low?

• True, there is no global price on Carbon. But the risks are there. Besides:

Ethics?

Lovande tecken • Världen kan klara sig på sol, vatten och vind

• Kostnaderna för solenergi faller drastiskt

• Investeringarna i förnybar el > fossilbaserad el

• Utvecklingen av passivhus; Bygga i trä

• Utvecklingen av superlätta o energisnåla fordon

• Nya material ersätter bomull

• Digitaliseringen

• Factor 5

• Biomimicry – lär av naturen

• From cradle to cradle

• Men det går för långsamt och systemet i stort ger inte rätt incitament

How to move forward?

• We need a vision for a sustainable society

• How much is lagom?

• Analyze carefully the necessary transition

• Apply a system´s approach

• Merge the agendas of finance, economy, employment, climate change, pollution and resource depletion and constraints

• The financial crisis is not about money alone – it is as much about natural resources

A old/new economic paradigm

Strategy for Sustainability • Stop having Economic Growth as main target ! Focus on

specific welfare goals instead.

• Priority to transdisciplinary science and education

• Education of economists a major challenge

• Strengthen Global Governance – start w EU+Asia?

• Merge poverty reduction w climate and ecosystem protection

• Reform economic and finance policy frameworks

• Public Procurement proactive role in transformation

• Land use critical – both forests and agriculture

• Stabilise population

• Bring in behavioral sciences; facts alone will not help

Strategy for Sustainability II

• Rethink Economics:

- Take Nature into Account

- New indicators for welfare and well-being

- Promote Circular Economy

- Binding targets for energy and resource efficiency

- Raising taxes on use of virgin materials/ reducing taxes on labor

- New Business models for performance

- Finance sector reform; start by taking climate and environment risks seriously

-

Strategy for Sustainability III • The world needs a binding climate agreement – to

evolve into agreement for Sustainability

• In the absence we need a Plan B – that gives priority as well to energy security

- Multiply support for Energy R&D

- Multiply investments in renewables

- Binding goal for energy efficiency

- Global Feed-in Tariff for Renewables

- Remove perverse subsidies

Strategy for Sustainability IV

• Crash Programme for Sustainable Innovation:

- From Cradle to Cradle – closed material

loops; ”Nature does not have a design

problem – Humans do”

- Biomimicry

- Use ICT for transformative change

- Functional services / Extend wealth

- Multiply financial support for Energy R&D

”De-coupling” – a challenge

• Ever since Bruntland Report ”de-coupling” has been seen as THE SOLUTION to address environment and resource constraints

• Relative de-coupling is happening – but absolute de-coupling is far away

• Efficiency gains normally eaten up by continued economic growth and the rebound effect

• Efficiency is crucial but must be achieved within a differently organized economy, i e by doing the right things

Move towards a circular/cyclic

economy

• Products are designed to last longer

• Reuse, recycling and reconditioning of materilas main objective

• Will require local service economy for maintenance and repair = more jobs

• Will require new business models focusing on HQ service and performance

• Can be promoted by tax reform; raising taxes on use of virgin materials while lowering taxes on labour

• A circular economy will mean less pressure on resources – both finite and renewables

• In addition it will lead to significantly lower GHG emissions ( Research by SEI, York and others)

• The EU Commission Roadmap for a Resource-Efficient Europe!

Functional sales do happen in B2B

• Rolls Royce leases jet engines

• Interface leases carpets

• Michelin leases tyres for trucks

• Xerox offers copying services

Resource and energy use + CO2 emissions have decreased

significantly. The companies have benefitted financially.

Now is time to move into the area of B2C – cars, appliances,

electronic equipment, kitchens, furniture, textiles etc

Labour productivity has increased twentyfold since 1850. It is not utopian to think of

resource productivity increasing tenfold in 100 years and fivefold in 50 years!

For that to happen, policy frameworks must change and Business Models undergo

significant change, giving real priority to alternative energy as well as energy and

resource efficicency

Ytterst en existentiell fråga

• Vår mission är att sprida kunskap om riskerna med hopp om att förändra

• Prevention is better than Cure

• Klarar vi som kollektiv att ta ansvar på lång sikt – utan än tydligare kriser?

• De rika ländernas ansvar är fundamentalt, men det talar vi tyst om

• När insikterna ökar borde intresset öka för att tänka om: Men långt mer än fakta behövs

• Djupliggande kulturella, psykologiska och sociologiska spärrar

• Medias förändrade roll en utmaning – ”infotainment”

• Både politiken och ekonomin kortsiktiga

• Politikens renässans?

• Det tog lång tid att utveckla demokratin eller avskaffa slaveriet…..

johan rockström och anders wijkman - bankrupting nature 2013

Art & Photos